AMPHENOL CORP: Signs MOU for Settlement of Dela. Suit over NXS Merger---------------------------------------------------------------------On January 23, 1997, the Board of Directors approved, subject toshareholder approval and certain other closing conditions, and theCompany entered into the Merger Agreement with NXS Acquisition. See "TheMerger." The proposed transaction was announced to the public on January23, 1997 and on that same date and on January 29, 1997, the Company andits directors (four of whom are also executive officers of the Company)were named as defendants in complaints filed in the Court of Chancery inthe State of Delaware by two persons and one person, respectively,claiming to be stockholders of the Company, individually and purportedlyas a class action on behalf of stockholders of the Company.

In general, the complaints allege that the Company's directors havebreached their fiduciary duties by, among other things, resolving toapprove of the Merger Agreement at an allegedly inadequate price and byallegedly failing to take adequate steps to enhance the value of theCompany and/or its attractiveness as a merger or acquisition candidate,including failing to conduct an auction. The complaints seek injunctiverelief prohibiting the Company from, among other things, consummatingthe Merger Agreement. The complaints also seek unspecified damages,attorney's fees and other relief.

On May 9, 1997, the Company announced the signing of a Memorandum ofUnderstanding with respect to the settlement of the class actions. Thesettlement is subject to the execution of a stipulation of settlementand approval by the Court of Chancery in the State of Delaware followingnotice to be provided to the stockholders of the Company constitutingthe plaintiff class. The Memorandum of Understanding specificallyprovides that the settlement does not constitute any admission ofliability by the Company or any other party with respect to the mattersalleged in the class actions.

ANTHEM BLUE: Doctors Sue in Conn. over Changes in Reimbursement Rates---------------------------------------------------------------------Sixteen doctors in the field of orthopedics have filed a lawsuit againstAnthem Blue Cross and Blue Shield of Connecticut for breach of contract,saying the company arbitrarily changes reimbursement rates. The lawsuitwas filed in Waterbury Superior Court, and seeks class-action status.

The doctors' attorney, William J. Sweeney Jr., said Anthem Blues changesreimbursement rates without notice, and pays doctors different rates forthe same procedure based on how frequently doctors request treatments.He said a doctor who submits more treatment claims is likely to receivea lower payment for each service than a doctor who submits fewer claims."They seem to be profiling doctors to decide how much to reimbursethem," Sweeney said. "The problem is we have a system that no oneunderstands." Sweeney also said the Blues delays payments and it'sdifficult for doctors to get a fast answer on whether a patient iscovered.

Mary Ellen Butler, a spokeswoman for the Anthem plan, said the companyis reviewing the lawsuit, but does not respond to specific allegations."We feel we have a good program and are confident that we can work withproviders to resolve these issues," Butler said. She said 7,200 doctorsparticipate in the company's preferred-provider organization, while5,700 participate in the health maintenance organization.

BENCHMARK ELECTRONICS: Kirby McInerney Files Securities Suit in Texas---------------------------------------------------------------------The following is an announcement by the law firm of Kirby McInerney &Squire, LLP on November 19, 1999:

Please take notice that a class action lawsuit has been commenced in theUnited States District Court for the Southern District of Texas onbehalf of all purchasers of Benchmark Electronics, Inc. (NYSE:BHE)securities between Aug. 10, 1999 and Oct. 21, 1999 (the "Class Period").The action asserts a claim against Benchmark and certain of its officersfor violations of Sections 10(b) and 20(a) of Securities Exchange Act of1934 by reason of material misrepresentations and omissions.

On Oct. 22, 1999, the company announced third quarter earnings that weresome 70% below consensus analyst estimates. The company attributed thepoor earnings, in part, to component defects and delays in delivery ofcertain components during the third quarter. During that quarter, thecompany completed a $75 million private placement, and, thereafter, usedsome of the proceeds of the private placement as well as Benchmark stockto finance a major acquisition.

Plaintiffs, institutional investors that invested more than $10 millionin Benchmark securities during the class period, have retained KirbyMcInerney & Squire, LLP, as counsel, and are also represented by Claxton& Hill. If you are a member of the class described over, you may, notlater than sixty days from Nov. 19, 1999, move the Court to serve aslead plaintiff of the class, if you so choose. In order to serve as leadplaintiff, however, you must meet certain legal requirements. If youwish to discuss this action, or have any questions concerning thisnotice of your rights, please contact:

BOEING CO: Agrees to Settle Case over Racial Bias in Salaries-------------------------------------------------------------The Boeing Company has agreed to pay at least $4.5 million to women andminority employees who the Government says are paid less than theirwhite male counterparts, according to people involved in the settlement,the largest ever under a Labor Department affirmative action complianceprogram.

In addition, Boeing agreed to examine the pay of all its nonunionemployees accounting for about half of its 202,000 workers -- over thenext four years and make further adjustments if it finds evidence of paydisparities based on a formula agreed upon with the Labor Department.

The agreement was signed and is expected to be announced. The deal comesafter several months of legal jousting between the Labor Department andBoeing and after the settlement of a class-action discrimination suitagainst the company.

But Labor Department officials are praising Boeing for its willingnessto go further than any other company by agreeing to a comprehensivesettlement. "This is the first agreement that obligates a federalcontractor to conduct self-examinations, make across-the-board salaryadjustments at every facility and then report its results to thedepartment," the Labor Secretary, Alexis M. Herman, said in draftdocuments describing the settlement.

The $4.5 million covers back pay and raises for about 4,400 women and1,000 minority workers at 10 Boeing operations across the country, thecompany said. Boeing said that it did not know precisely how many ofthose employees would receive compensation and that the $4.5 millioncould grow depending on its findings. One Labor Department officialdescribed the figure as "a floor, not a ceiling."

The deal stems from investigations dating back to 1994 by the LaborDepartment's Office of Federal Contract Compliance Programs, whichaudits the employment practices of companies that do business with thefederal government to ensure that they are complying with federalantidiscrimination laws.

As part of the settlement, Boeing did not acknowledge that it engaged indiscrimination. But it agreed that it did not meet the LaborDepartment's standards for equal pay at some of its operations. James B.Dagnon, Boeing's senior vice president in charge of personnel, said thatthe settlement was a way for Boeing, which has transformed itself withtwo multibillion-dollar acquisitions over the last three years, toensure that it was meeting its obligations at all its far-flungoperations.

"We have both agreed on the yardstick that is going to carry usforward," he said. "It is a yardstick we can live with and they canjudge us by."

Mr. Dagnon added that it was too early to determine how much money theagreement would cost the company.

Though the agreement is the largest so far for the Labor Department, itis eclipsed by settlements of civil lawsuits contending discrimination.Texaco, for example, settled such a lawsuit in 1996 for $176 million.

And in January Boeing agreed to pay $15 million to settle theclass-action lawsuit filed on behalf of minority workers who said theywere discriminated against.

Some Boeing workers subsequently challenged the settlement, which wasbrokered by the Rev. Jesse Jackson. A judge approved the deal inSeptember, but his decision is being appealed.

The agreement with the Labor Department comes as something of asurprise. In July, the department took the unusual step of suing Boeing,which received $11 billion in Government contracts last year, after thecompany refused to meet its demands for employment information at threeof its operations.

The lawsuits were later settled before they got to court, and theagreement commits Boeing to begin compiling more data on job applicantsso that the Labor Department can better determine in the future whetherthe company is discriminating against women and minorities. Previously,Boeing kept records only of applicants who were interviewed, not thosewho expressed interest in jobs and were turned away.

The Boeing operations that will share in the $4.5 million are inPhiladelphia; Huntsville, Ala.; Tulsa, Okla.; Wichita, Kan.; Long Beach,Calif.; Mesa, Ariz.; Stennis Miss., and Kingsville, Tex.(The New York Times Nov-19-1999)

Even last week's lawsuit accusing officers of wrongful arrest, filed bya Canton veterinarian who said he was simply unloading a spare Red Soxticket when he was hauled in last summer, hasn't made the PoliceDepartment budge from its view of the state's scalping law. Policeofficers insisted they will continue to arrest private citizens whoresell a spare ticket for face value or less. Police are sticking totheir view that the state's 1924 scalping law requires any ticketreseller - regardless of the number of tickets and their price - to belicensed by the state.

They said they won't stop making such arrests unless lawmakers redraftthe statute. "Any changes in the statute must come from theLegislature," said police spokesman Kevin Jones.

The comments came after Gary A. Lainer, 44, of Canton, filed aclass-action lawsuit last Wednesday against Boston officers who arrestedand handcuffed him on July 31 after he sold a spare $18 Red Sox ticketat face value. While the charges were ultimately dismissed by a judge,Lainer said he is challenging the Police Department's power to arresthim under the scalping law. He is seeking unspecified damages, as wellas a court order to prevent Boston police from making similar arrests.

Lainer's lawsuit also came after several law enforcement attorneys andgovernment officials were quoted in the Globe last month questioning theBoston police interpretation of the law.

The officials - Tim Shea, chief of the public protection bureau of theMassachusetts attorney general's office; Gerry Stewart, a Suffolkassistant district attorney who oversees cases at the Boston MunicipalCourt; and Joseph Lalli, acting commissioner for the state Department ofPublic Safety, which licenses ticket resellers - said the law demands astate license only for those who are "in the business" of resellingtickets. Being in the business, they said, means exhibiting certainbehavior, such as marking up tickets or carrying large numbers oftickets.

The Lainer suit will be a fascinating test case of the state's scalpinglaw, said Martin Rosenthal, a Boston lawyer who has been trying foryears to focus attention on scalping arrests at Fenway Park and otherarenas. If a judge rules that Lainer was wrongfully arrested, the Bostonpolice will have to change their ways or face major legal consequences,he said.

Governor Paul Cellucci wants to fix the problem another way. This monthhe filed a bill that would make it legal to resell a ticket at facevalue or less in most cases. The only exception would be if a sportsfacility sets up a ticket resell zone, in which case people at the arenawould have to resell in that area or face arrest.

But others don't think a change in law is necessary for such casualticket sales. Henry Eaton, a former assistant attorney general who hashandled many scalping cases and is now in private practice, said hedoesn't see how Lainer, selling a spare ticket with no profit, hascommitted a crime. "I'd be hard-pressed to see how he engaged incriminal behavior," he said.

It seems Lainer is not alone in his experience. His laywer, RobertMendillo, said he received a phone call from another man who said he wasarrested by Boston police after selling a spare ticket for less thanface value.

A Roxbury district court magistrate, Harvey Buckley, said last month hedropped charges against a New Hampshire minister who was arrested byBoston police for reselling some spare Red Sox tickets at face value.Buckley said he did not see the minister's actions as criminal.

Meanwhile, Lainer said he is looking forward to his day in court. Havingnever before been arrested for any crime, the avid Red Sox fan said hestill can't believe he landed in a police station in late July, afterexpecting to watch the Red Sox play the New York Yankees with RogerClemens on the mound. Instead, he found himself handcuffed at a policestation, missing the game in which his team triumphed, 6-5. "It's thetheater of the absurd," he said. (The Boston Globe Nov-19-1999)

CASINOS: Lawyers Sue in LA & Las Vegas; Debtors Treated Like Criminals----------------------------------------------------------------------When Manuel Osvaldo Nacrur stepped off a plane in Miami last year, hegot a rude surprise. Instead of catching his connecting flight home toLos Angelems, Nacrur was handcuffed, jailed 10 days, then hauled aroundthe country in a prisoner van for more than two weeks. Finally, afederal lawsuit charges, he was delivered to the Las Vegas authoritieswho had issued a warrant for his arrest. His alleged crime? The SanFernando Valley resident owed the MGM Grand casino $ 45,000 in gamblingdebts.

Nacrur's experience, critics say, represents a troubling trend in theway gambling houses are collecting their unpaid markers -- vouchers thatallow gamblers to keep playing when their cash runs out. Rather thantreating these debts as civil matters, casinos in the nation's threelargest gambling states --Nevada, New Jersey and Mississippi -- areturning to police and prosecutors as enforcers, threatening gamblerswith jail time unless they pay up. "This borders on misusing thecriminal justice system," said I. Nelson Rose, a gambling law expert atWhittier Law School in Costa Mesa. "The criminal justice system was notdesigned for private debt enforcement."

Now two Los Angeles attorneys have launched what is believed to be thefirst challenge to this practice. In a series of four class-actionlawsuits filed in Los Angeles and Las Vegas federal courts, the lawyersallege that Nevada prosecutors have been using their state's bad checklaw to collect markers for some of the state's biggest casinos,including the MGM Grand, Caesars Palace and the Las Vegas Hilton. "Whyare we keeping people in jail to collect gambling debts?" asked RichardFine, who filed the cases with colleague Gerald Werksman. "It's ahorrible use of public funds, and it's an unconscionable means tocollect debts."

But Clark County Dist. Atty. Stewart Bell, whose territory includes LasVegas, contends he is merely enforcing Nevada's laws, which make it acrime to write a bad check to "obtain credit extended by any licensedgaming establishment." "These markers are checks under Nevada law," Bellsaid. "When you present an instrument for payment, and it's not honored,it's a crime."

Representatives for the casinos named in the suits said they could notdiscuss pending litigation.

Markers, printed by the casinos, look like checks, right down to thesignature line. They list a player's name, bank account numbers, and adollar amount, which can range from a few hundred dollars up to $ 1million. A gambler can either pay up immediately or through billedinstallments. If he defaults, the marker is "cashed" by the casino,which has permission to tap directly into a player's bank account. Inthe old days, if the account was dry, the casinos were out of luck. Thatis because most states traditionally considered betting to run counterto good public policy and courts did not enforce gambling debts, even inNevada, Rose said.

But gaming interests changed that in 1983 when they lobbied two billsthrough the Nevada Legislature making gambling debts enforceable incivil court and, under criminal law, equating unpaid markers with badchecks, records and interviews show.

Special Unit Formed in 1995

The criminal provision was not actively enforced until 1995, when thenewly elected Bell formed a unit to handle bad checks and the Las Vegascasinos asked him to prosecute gamblers who would not pay their markers.Bell said that of the thousands of bad check cases his office handleseach year, only 5% to 10% are from casinos -- and just a small portionof those involve markers. Those cases involving $ 250 or more areprosecuted as felonies. The Las Vegas district attorney's office is notalone in its casino work. The Lake Tahoe branch of the Douglas County,Nev., district attorney's office does a brisk business in unpaidmarkers, and prosecutors in Reno say that at least half of their badcheck cases involve casino vouchers. Prosecutors in Atlantic City, N.J.,and Mississippi --the nation's second and third largest gambling areas-- say they also pursue unpaid markers as crimes. "Anything over $ 100,and you're going to jail," said Kevin Otis, head of the bad check unitin Vicksburg, Miss., one of about half a dozen Mississippi towns thattogether pull in billions of dollars from riverboat gambling.

In his federal lawsuits, however, Fine has focused on Las Vegas, wherehe alleges that Bell has prosecuted about 5,000 cases in the last fouryears. "The gaming industry is one of the biggest industries in Nevada,"Fine said. " Bell is servicing the industry." Clark County electionrecords show the industry has been among Bell's largest campaigncontributors. During his 1998 reelection, casino corporations gave morethan $ 50,000 of the $ 178,000 he raised. Those named in Fine's lawsuitswere contributors: the Las Vegas Hilton and Caesars Palace each gave $5,000; the MGM Grand gave $ 1,500.

Bell said the idea that he would exchange favors for contributions isridiculous. "We have no discretion as to which laws to enforce," hesaid.

Fine disagrees. His lawsuits argue that markers are civil debts, muchlike credit cards, and Bell's office should not be involved. "There's noquestion that the casino treats markers like credit, and when they can'tget repaid in other ways, they go to the D.A.," Fine said.

Fine admits that those being prosecuted are not all sympathetic figures-- some may be gambling addicts -- but says that many are averageworking people who get caught up in the excitement. "These aren't thefellows that are coming in and losing $ 5 million," Fine said. "Theseare guys that come to Las Vegas for a convention. They borrow $ 10,000or $ 20,000, they gamble, and they lose. Then all of a sudden they'vegot this debt they can't repay.

It could happen to anyone." Fine said this happened to Nacrur, a65-year-old photographic technician from Panorama City who racked up $45,000 in markers playing the tables in 1997. Nacrur was not madeavailable for comment. His lawsuit contends that U.S. customs officials,acting on a Las Vegas warrant, snagged him at the Miami Airport on Jan.31 and jailed him for 10 days before employees of a private transportcompany loaded him into a van for a circuitous trip to Nevada. Once backin Las Vegas, the prosecutor's office offered Nacrur a deal: Pay off themarkers and avoid prosecution, the suit charges. When Nacrur refused, hewas released on his own recognizance, and is now facing charges ofwriting bad checks. Fine argues that the offer recalled the colonialdays of debtors prison, when those owing money were jailed. Law expertRose says that Fine's challenge of the practice is the first he hasheard of and gives it good odds. (Los Angeles Times, Nov-18-1999)

Keating was sued by the federal government's (RTC) in the U.S. DistrictCourt for the District of Arizona following the scandalous collapse ofCalifornia's Lincoln Savings and Loan Association. The suit alleged,inter alia, common law fraud, civil conspiracy, breach of fiduciaryduties, and RICO and several other federal statutory violations stemmingfrom Keating's alleged role in the bank's failure. RTC moved for summaryjudgment on several counts on the grounds that a criminal conviction hadbeen handed down against Keating, and that judgments had been renderedagainst him in two related civil suits. RTC took the position thatissues in its suit had already been litigated and decided againstKeating and, as such, the government was entitled to summary judgment.

The district court agreed, and in May 1994, a $4.3 billion judgment wasentered against Keating. The judgment was later amended to include themarital estate of Keating's wife, Mary Elaine, following a motion byRTC. Both Keatings appealed to the Ninth Circuit U.S. Court of Appeals.

On appeal, the Ninth Circuit explained that in order to prove collateralestoppel, or issue preclusion, RTC had to show that Keating had a fulland fair chance to litigate the issues of the current suit in the priorsuits, that the issues were actually litigated and were necessary tosupport the judgments in the prior suits, that the issues were decidedagainst Keating in final judgments, and that Keating was a party to theprior proceedings or was in privity with a party. The appellate panelthen discussed the prior actions at issue.

The first was a criminal case charging Keating with numerous crimesarising out of the Lincoln collapse. In the criminal matter, theconviction was reversed and a new trial was ordered by the districtcourt. In the meantime, however, Keating pleaded guilty to wire fraudand concealing assets in an effort to defeat the bankruptcy code. Inconnection with his plea, Keating, who had been the principalshareholder, CEO, and chairman of the board of American ContinentalCorporation (ACC), agreed that he had instructed a subsidiary of ACC togive unsecured loans to certain insiders. Looking to RTC's complaint,the circuit panel stated that it did not include the criminal conduct towhich Keating had pleaded guilty. Summary judgment could not be affirmedon that basis, the panel said. In addition, the conviction had beenvacated.

The panel then discussed the case of Lincoln Savings and Loan Ass'n v.Wall , 743 F.Supp. 901 (1990), which concerned challenges to the FederalHome Loan Bank Board's decision to appoint a receiver for Lincoln. Theonly determination necessary to the judgment was whether the board actedin an arbitrary and capricious manner, the panel said. The case had alimited scope of inquiry, the panel held, and preclusive effect couldnot be given to the ruling.

The second suit RTC cited in support of its collateral estoppel claimswas Shields v. Keating (In re American Cont. Corp./Lincoln Savings &Loan Securities Litigation , MDL No. 834 D AZ, 1992 ), which includedracketeering charges. Shields was a class action against Keating whichalleged that overvalued securities had been sold by ACC, the panelstated, and summary judgment had been entered in favor of theplaintiffs. The circuit then analyzed the issues present in Shields withthose in RTC's case at bar, using a four factor test to determinesimilarity for collateral estoppel purposes.

After discussing RTC's RICO claims contained in counts one and three ofthe complaint, the panel held that the issues were not the same as thosein the Shields case, in which the ACC investors asserted that theypurchased the company's securities on false representations. However, inthe case at bar, Lincoln was not an investor in ACC. While the patternof conduct in Shields and the present action are related, the courtobserved, the damages alleged to be due to Lincoln by RTC arose fromconduct that was not adjudicated in Shields, the Ninth Circuit ruled.The Shields case was not one that would sustain the lower court's grantof summary judgment, the panel concluded.

The circuit panel also said that RTC's fraud and conspiracy counts werenot identical to the issues in the Shields litigation, and said the sameabout the breach of fiduciary duty allegations. The lower court rulingwas reversed, and the $4.3 billion judgment against Keating wasoverturned. The panel did not reach the issue of his wife's maritalestate, and the matter was remanded for further proceedings. (Civil RICOLitigation Reporter, Vol. 16; No. 1; Pg. 7, September 1999)

COCA-COLA: Plaintiffs Voice Severe Punishments for Withholding Papers---------------------------------------------------------------------The plaintiffs in a racial discrimination suit against Coca-Cola Co.said last Wednesday the company has repeatedly violated court ordersrequiring it to hand over relevant documents in the case. As a result,the court should set a "date certain" requiring the Atlanta-basedbeverage giant to comply with its obligations, the plaintiffs' attorneyssaid. In addition, they said, severe punishments should be set forcontinued noncompliance with court orders.

Coca-Cola spokesman Ben Deutsch declined to comment on the plaintiffs'motion. "We prefer to present our arguments to the court on Friday,"Deutsch said, referring to a scheduled hearing before U.S. MagistrateJudge E. Clayton Scofield.

When the plaintiffs previously raised the withholding of documentsissue, the company said it had provided them with about 40,000 pages ofdocuments and had offered another million pages for their review. Thecompany also has accused plaintiffs' attorneys of filing such motions tounjustifiably attract media attention.

In addition to the withholding of documents issue, the magistrate wasscheduled to deal with several other matters, including: Whether thecompany has shredded documents.

The plaintiffs contend that affidavits and pre-trial depositions showedthat employees asked that shredders be placed in a special room that wasset up by the company to collect documents and employment data for thesuit. Plaintiffs' attorneys also alleged that an eyewitness sawshredders in the room.

But the company said it has never put shredders in its data collectionroom, that it has never shredded any relevant documents and that theplaintiffs are making irresponsible statements in an effort to misleadthe court and manipulate public opinion. The company said employees oncediscussed the idea of using shredders in that room to discard miscopiesor extra copies of confidential documents the plaintiffs would not beentitled to. But, the company said, that idea was " immediately vetoed"in favor of using two confidential refuse bins.A company attorney did purchase a shredder for his office. But he saidhe did that to discard confidential information that plaintiffs'attorneys would not be entitled to.

Whether the company has to turn over 93 disputed documents to theplaintiffs. The plaintiffs contend the company is selectively turningover favorable employment information, while keeping unfavorablematerial from them that they have a right to see.

The company has said it has the legal right to withhold these specificdocuments for several reasons, including its right to keep confidentialthe communications it has with its own lawyers; whether certaindocuments turned over to the plaintiffs and filed with the court can bekept from public view. The company has stamped "confidential" on somedocuments, meaning both sides are required to keep them secret, althoughthey can be used in the case.

But the plaintiffs want the court to unseal a handful of documents thatrelate to the U.S. Department of Labor's 1997-98 audit of the company'scompliance with affirmative action requirements governing federalcontractors.

While some of the specifics of that audit are not available to thepublic, the company was found to have violated some regulations. Forexample, the audit said the company did not adequately disseminate itsequal opportunity policy. Specifically, the audit said, all managerswere not clear about the company's affirmative action program. The auditalso said the company did not adequately develop action-orientedprograms to eliminate problems and attain established goals.

Deutsch, the company spokesman, said the audit found no evidence ofdiscrimination by the company against any individuals. As a result, hesaid, the company agreed to alter some record keeping and reportingpractices to better conform to government guidelines. (The AtlantaJournal and Constitution Nov-18-1999)

ESCROW COMPANIES: CA State Controller Provides Update; $ 2.2 M Remitted-----------------------------------------------------------------------State Controller Kathleen Connell reported on November 18 that heroffice's statewide audit effort against California's title and escrowindustry is progressing well and eventually will result in the recoveryof millions of dollars for California home and business owners.

She is scheduled to make a major announcement on the escrow lawsuitshortly to report on the specific results of her audit effort to date.Currently, 17 title and escrow companies with branch offices in SanDiego County are in the process of being audited or will soon beaudited.

"The audit results to date support our lawsuit contention that title andescrow companies systematically cheated California home and businessowners out of millions of dollars in escrow proceeds," said Connell. "Iam committed to the recovery of every cent illegally withheld," sheadded.

In San Diego County, the 17 title and escrow companies that are subjectto the controller's audit include the following: American Title Co.,Benefit Land Title Co., Chicago Title Co., Commonwealth Land Title Co.,Fidelity National Title Insurance Co., First American Title Co., GatewayTitle Co., Keystone Escrow Inc., LandSafe Title of California, LawyersTitle Co., North American Title Co. Inc., Northern Counties TitleInsurance Co., Old Republic Title Co., Rancho San Pedro Escrow, SouthCoast Title Co., Spring Mountain Escrow, and Stewart Title of CaliforniaInc.

To date, these companies have voluntarily remitted approximately $2.2million to the state (see listing below). Additional escrow and titlecompanies in the San Diego area are in the process of being audited orwill soon be audited.

"Although I am encouraged by the apparent willingness by some of thecompanies to cooperate by voluntarily remitting funds to the state, I amconvinced that the final audit outcome will show that the amount owed ismuch higher, perhaps as much as $500 million statewide," said Connell.

The statewide audit effort by the State Controller's Office stems fromConnell's filing of a class action lawsuit in May of this year on behalfof consumers against California's title insurance and escrow industriesfor numerous illegal actions in the administering of escrow accountsfrom 1970 to the present.

The suit alleges that title and escrow companies illegally held dormantand unclaimed escrow funds, retained fees charged to home buyers forservices not rendered and retained interest on deposited escrow fundsthat should have been returned to their customers.

Connell spoke in San Diego before the League of California Cities. Formore information visit the Web site http://www.sco.ca.gov

Since the filing of the lawsuit on May 19, 1999, the State Controller'sOffice has received $2,190,808.49 from the title and escrow companieslisted below.

Holder Amount received

American Title Company $ 379.33Benefit Land Title Company $ 12,231.57Chicago Title Company $ 143,010.77Commonwealth Land Title Company $ 296,237.40Fidelity National Title Insurance Company $ 20,661.75First American Title Company $ 29,506.73Gateway Title Company $ 38,452.14Keystone Escrow Inc. $ 801.58LandSafe Title of California $ 1,612.42Lawyer Title Company $ 201,421.72North American Title Company Inc. $ 29,646.80Northern Counties $ 100.00Old Republic Title Company $ 419,947.24Rancho San Pedro Escrow $ 147.48South Coast Title Company $ 2,926.70Spring Mountain Escrow $ 519,486.61Stewart Title of California Inc. $ 474,238.25

FEN-PHEN: Letters by Plaintiffs' Lawyers Show Disbelief in Health Risk----------------------------------------------------------------------A supporting document written as part of last month's $3.75 billiontentative settlement of nationwide diet-drug litigation suggests thatsome lawyers on the plaintiffs' team, despite their legal strategy tothe contrary, did not believe that their clients faced long-term healthdangers from the drugs.

The letter seems to put some plaintiffs in the position of benefitingfrom a $1 billion medical-monitoring program for a disease the twolawyers say those patients will never contract. The Oct. 6 letter,signed by two of the Philadelphia lawyers involved in the high-profilecase and delivered to attorneys for drugmaker American Home ProductsCorp., has further inflamed tense relations among some of theplaintiffs' lawyers.

Written the day before the tentative settlement was announced, theletter states in part that if heart-valve disease "is not present at thetime of cessation of (diet) drug use (or shortly thereafter), it willnot later occur as a consequence of drug use."

That statement appears to contradict the position taken by theplaintiffs in the New Jersey class-action trial that helped lead to thenational settlement. In documents filed in the New Jersey case, threemedical experts hired by the plaintiffs wrote that, based on othermodels, "it is reasonable to expect that valvular abnormalities mightappear only years later."

The letter, issued under the letterhead Diet Drug Litigation NegotiatingCommittee, was written by Philadelphia lawyers Michael Fishbein and GeneLocks. Asked whether the letter's proposed "findings of fact" would bepart of a final package submitted to state and federal courts,Philadelphia lawyer Sol Weiss, who was one of the lead trial attorneysin the New Jersey case, replied, "That is not happening." The finalsettlement, which still needs court approval, may be filed as early asNovember 19.

Other lawyers involved in the litigation - some of them already angry atterms of the proposed settlement - learned about the letter only lastweek when it began circulating across the country via fax. Some saidthey expected the letter to be a major focus of discussion at adissidents' strategy meeting scheduled to start November 19 in Texas.Others said they might sue their colleagues for undermining their legalposition. "We're in the process of preparing legal action with respectto the individuals who signed and received (carbon) copies of it, plusanybody who is in a fiduciary capacity as part of the negotiating team,"said Mark Bern, a New York attorney whose firm says it representsthousands of clients who took the AHP obesity drugs Pondimin or Redux.

The drugs were taken off the market two years ago by AHP and its St.Davids-Pa., based Wyeth-Ayerst Laboratories unit after studies linkedthem to heart-valve abnormalities. Pondimin, known generically asfenfluramine, was the "fen" in the once-popular "fen-phen" diet-drugcombination that was used by an estimated six million overweightAmericans. Redux was the chemically similar successor to Pondimin.

In the letter, Fishbein and Locks list six points that "we intend toinclude in the findings of fact which will be proposed to the court(s)following the presentation of evidence to support each fact."

Among them: A conclusion that there is no "reliable epidemiologicalevidence" that people who took Pondimin or Redux for less than 90 days -a description that American Home says fits most Pondimin and Redux users- are at increased risk of developing significant valve disease. ButFishbein and Locks recommend monitoring for everyone who took the drugsfor more than 60 days.

The medical experts' report submitted to the New Jersey court said: "itremains unknown whether a normal echocardiogram early on precludesdevelopment of valvular abnormalities years later, even if there is nofurther exposure" to the drugs. But it cited other diseases, includingchildhood rheumatic fever, as examples in which significant heart-valvedamage could develop years later. The experts' report also stated that"there have been reports of valvular lesions occurring in patientsexposed for as few as three weeks."

Weiss noted that the final sentence of his colleagues' letter statesthat it "shall not be admissible in evidence for any purpose," meaningAmerican Home cannot use it against plaintiffs in cases going to trial.Asked whether the letter contradicted the experts' report, he replied,"I understand you could take that interpretation." But the points atissue will not be in the final settlement, he said.

The proposed settlement announced Oct. 7 would require American Home topay $ 3.75 billion. That includes $1 billion for a medical-monitoringprogram for people who used the drugs but have suffered no apparent illeffects, and $2.55 billion for payments to people with significantheart-valve disease. The rest of the money - up to $429 million - wouldgo to the plaintiffs' attorneys. Payments to patients would be made overas many as 16 years "if and as needed." When adjusted for inflation,total payments could reach nearly $4.9 billion.

Wyeth spokesman Douglas Petkus said the company had no comment about thelawyers' letter. American Home is trying to complete a merger withWarner-Lambert Co., a deal that was proposed only after the fen-phenlitigation appeared to be settled. The companies are battling a hostileattempt by Pfizer Inc. To buy Warner-Lambert. (The Philadelphia InquirerNov-19-1999)

FMC CORP: Toxicologist Testifies for Plaintiffs at Retrial on Gas Leak----------------------------------------------------------------------A toxicologist testifying for the plaintiffs in the retrial of amultimillion dollar lawsuit against FMC Corp. said that he examined 143people who came to attorneys seeking to join the class- action suit.Thomas Schrager testified that, at the lawyers' request, he set up anoffice in the same motel where potential plaintiffs were beinginterviewed. Those who wanted to join the suit were sent down the hallto Schrager for preliminary testing. Schrager told jurors that many ofthose people downwind from a Dec. 5, 1995 leak of hyrdrochloric acid gasexperienced mild to moderate health problems as a result. "The releasemost certainly did cause adverse health effects for those individuals inthe downwind area. Unquestionably," Schrager said. He explained thatexposure levels for the mile downwind from the plant could have beenmore than 1,000 times the acceptable level.

On cross-examination, defense lawyer Lee Davis Thames pointed outSchrager became involved in the case solely because of the plaintiffs'efforts to win money from FMC. Schrager estimates that, to this point,his services in the trial have cost $ 45,000. Hundreds of plaintiffsjoined the 1995 class-action suit, saying that because of the release ofa plume of the gas they suffered various difficulties, ranging fromsimple inconvenience to long-term health problems. They maintain thatBrian Macconnachie, manager of the FMC Nitro plant, and his employeracted negligently.

Last year, a jury agreed and awarded the plaintiffs a $ 38.8 millionjudgment. Chief U.S. District Judge Charles Haden, though, ruled thatdefense lawyers had acted unfairly by calling a last-minute surprisewitness. The judge threw the verdict out, calling for the retrialcurrently under way.

In the retrial on November 16, plaintiffs' lawyers devoted nearly awhole day to grilling Macconnachie. Macconnachie withstood hour afterhour of pointed questioning from Jack Harang, a lawyer for theplaintiffs. Harang was trying to establish that Macconnachie knew thatsuch a leak was probable and that he ignored opportunities to preventthe problem. "You could have, with the stroke of a pen or the simplelifting of a phone, prevented the release of this extremely hazardousmaterial, couldn't you?" Harang asked.

At this point and many others throughout the testimony, Haden remindedHarang that he was supposed to be asking questions, not testifying. Thepen stroke and phone call Harang was talking about would have been toexpedite safety projects suggested by an FMC evaluation of the plantmonths before the leak. The safety audit advised, along with severalother projects, that a leak containment system be built to capture gasesthat could escape if pressure became too great in the plant's A-1Reactor.

Harang suggested that Macconnachie chose to ignore the attendant safetyrisks by deciding not to immediately build the gas capture system.Macconnachie tried to explain that the recommendation to build the ventcapture structure was under way and progressing at normal pace, alongwith other safety projects, all of which were important. Harang, though,categorized the decision not to pick the one project over the others asnegligent. "The sooner you got it done, the less chance there was goingto be of exposing your employees and this community to what you,yourself, have called extremely hazardous chemicals, isn't that true?"Harang asked. (Charleston Daily Mail Nov-17-1999)

FORD MOTOR: Judge Declares Mistrial for Ignition Modules Defect Lawsuit-----------------------------------------------------------------------With the jury still hopelessly deadlocked on their 12th day ofdeliberations over the massive class action against Ford Motor Co.,Alameda County Judge Michael Ballachey had no choice but to declare amistrial on November 18 and send the divided jurors home for good.

On November 18 morning, Ballachey once again tried to rally the group tocontinue pushing toward a verdict, even asking them whether a few daysof vacation might help them clear their heads enough to be able toresolve their differences. But when the jurors returned within fiveminutes from a roundtable vote on that proposal, it was clear the sevenmen and five women were ready to move on with their lives. "In the wordsof boxer Roberto Duran, 'No mas,'" Ballachey told attorneys,paraphrasing the last note he received from the jury and upholding theforeman's opinion that "the likelihood of reaching a verdict is nil."

After five months of voluminous and extremely complex testimony fromboth sides, the jury was left to decide whether Ford violated consumerprotection laws when it allegedly put faulty ignition modules in itscars and then tried to hide the defect from consumers.

Plaintiffs' attorneys presented testimony from more than 50 witnesses --on the stand or in taped deposition -- to prove their claim. Ford spentmillions on research and expert testimony, including $9 million on onewitness and his firm. In September, attorneys feared a mistrial afterlosing all but one of the alternates. The trial also was marked bynumerous breaks to accommodate vacations by jurors and Ballachey.

Two days ago, the foreman sent out the first red flag that the case wasverging perilously close to a mistrial when he reported that the jurywas only two questions into the hefty 16-page, seven-question verdictform -- and already heading toward a deadlock. The group had tallied a6-6 vote on the first question and an 8-4 vote on the second question onthe verdict form.

Over the last few days, the group seemed to be on the right track. Theysent out a few notes requesting additional documents for review. Theysent out a few others asking the judge and attorneys to clarify keydefinitions that would help resolve differences. They were even able toagree from which local restaurant to order take-out. But inside, thedeliberations were going nowhere. "It seemed like after a certain point,people didn't care to listen to each other any more. They had made uptheir minds," said juror Dave Kloski, who voted in the plaintiffs'favor.

The 12th day of jury deliberations started out like most of the others.While jurors were inside hashing over the case, attorneys from bothsides sat around Department 19 working on laptops while waiting to fieldquestions from jurors -- or to hear their decision.

The morning's newspapers were strewn over the chairs in the courtroom. Afew journalists circled around the courtroom like vultures waiting tofeed. Judge Ballachey spoke informally about his recurring backproblems.

At 10:30 a.m., the jury rang the bell beckoning the court attendant. Theforeman reported the group hadn't budged much at all, with a 7-5 vote onquestion one and a 8-4 vote on question two -- in the plaintiffs' favor.He respectfully asked the court to let them go. Some jurors said theydidn't mind wading through the volumes of technical testimony but werefrustrated by the constant breaks to accommodate vacation and otherplans. Others said they were frustrated with the evidence itself -- thatthere were " more than enough" documents presented but not enough toprove the plaintiffs' case.

Jurors on both sides of the debate accused the other side of relying onemotions instead of evidence. At least two said they thought Ford mightbe getting away with something and hoped the next jury would be moreunited. Erik Mathews, a juror who voted for the plaintiffs, said somepeople had trouble believing Ford would intentionally withholdinformation from the public. "They felt that the plaintiffs were goingafter Ford just because it was a big company with deep pockets," hesaid. "But the clincher was the evidence. If you have a module andyou've got to keep getting it fixed, you have a real danger toconsumers."

Yet jurors who supported Ford maintained that despite the truckload ofdocuments and the hours of videotaped deposition from Ford executivesand engineers themselves, a preponderance of the evidence simply didn'tsupport the plaintiffs' claim. Juror Araceli Carbonell said at leastpart of the reason she voted in Ford's favor was because priorinvestigations into claims about Ford safety defects didn't pan out."The National Highway Traffic Safety Administration didn't find thedefect and so they closed the case. That is, for me, something," shesaid.

And Carbonell said it was easy for the group's discussion to meanderabout because many of the definitions as well as the questions were "toovague." "It was not very civil in there at all," she said, referring tojury quarters. "At times, we were at the brink of insulting each other."

Plaintiffs' counsel Barry Bunshoft, a founding partner of HancockRothert & Bunshoft, said he was disappointed by the outcome. A formerdirector of the attorney general's consumer fraud division, Bunshoftsaid he wanted the firm to take the case "not just for economic reasonsbut because it's the socially beneficial thing to do."

Still, plaintiffs' attorneys said they took heart in the jury's apparentleanings toward a verdict in their favor. "We were one juror away fromwinning this case," said Steven Pavsner, a partner with Maryland-basedJoseph, Greenwald and Laake and a member of the plaintiffs'(r)MDUL/team.

"The strongest juror against us was one who simply refused to believeFord could have done what the documents showed they did. It's hard tocombat that kind of prejudice," said Pavsner.

But Ford also interpreted a victory, with attorneys saying the mistriallends credence to their continued argument that the class action shouldnever have been certified. "The inability to reach a verdict is oneclear sign that the case was unmanageable as a class action," saidDonald Lough, in-house counsel for Ford. "The jury verdict form includeda total of 2,106 questions if you take into consideration the 351different products listed," he said, adding that he didn't think thejurors were given adequate guidance on answering the form -- as seen bytheir repeated requests that the court clarify definitions and juryinstructions. "It really is unrealistic to expect 12 people to come toan agreement on so many different issues about so many differentproducts," he said.

Ballachey's declaration of a mistrial, of course, doesn't mean theattorneys will be packing up their bags and leaving Department 19anytime soon. But it also doesn't mean they'll immediately be scramblingback into jury selection in Howard v. Ford Motor Co., 763785-2.

Ballachey already reserved Dec. 1 for a related hearing in which heintends to decide, independently of a jury verdict, whether Fordpracticed unfair competition. He could order a recall of cars as well asorder disgorgement of company profits that may have resulted from thedefect. But Ford maintains that the judge can't resolve that issue untila new jury answers the question of consumer fraud.

The class covers owners of Ford vehicle model years 1983 to 1985 andcould include more than 3 million members. The California case is thefirst of six identical suits pending in Alabama, Illinois, Maryland,Tennessee and Washington courts.

Before letting the jurors go, Ballachey thanked the group for theirtireless efforts to try to decide the case -- likely the retired judge'slast big trial -- and praised them for their dedication to the justicesystem.

One juror who moved out of the county midway through the trial has beenliving in a local hotel away from her family to continue hearing thecase. Still another who suffered injuries to her face in a hit-and-runcar accident continued to come to trial on pain medication. And another,juror Faye Farin, said she owes it to her family for being reallyunderstanding throughout the last six months. "My son was injured, so Ihad family issues to deal with. I was promoted at work, but I haven'tbeen there to fill the position," she said. "It's been a very long sixmonths." (The Recorder Nov-19-1999)

Jo Ann O'Neil filed the action on behalf of "the millions of present andpast Aetna HMO members who, as a group, have been targeted by thedefendants and induced into subscribing to and enrolling in Aetna's HMOplan by the defendants' standardized and uniform misrepresentation andomissions of material facts relevant to advertising, marketing andmember materials directed to the plaintiffs and the class."

Scheming

The action alleges Aetna engaged in a fraudulent scheme thatmisrepresented to the class that its primary commitment to its HMOmembers is to maintain and improve the quality of the health careprovided. Further, Aetna misrepresented that its treatment decisions aremade on the basis of medical necessity when Aetna has aggressivelyengaged in implementing undisclosed systemic internal policies designedto deny claims and medical services, according to the complaint.

The lawsuit says the internal policies are designed to discouragephysicians from delivering medical services, limit or deny the deliveryof services based upon cost criteria and interfere with the medicaljudgment of the physicians by substituting the judgment of claimsreviewers without appropriate medical training.

According to the complaint, the American Medical Association (AMA) has"voiced concerns" about the undisclosed policies, saying certain onesare "dangerous" for patients. The AMA has also said some of Aetna'spractices are "troubling," with "serious implications for patients,"according to the complaint.

The action cites some of the undisclosed policies as disparate treatmentof ERISA patients versus non-ERISA patients and gag clauses.

Exploitation

The complaint says hundreds of physicians have withdrawn from Aetna HMOplans across the country. "Aetna is . . . not lawfully entitled toexploit fear of economic loss or loss of business against America'sphysicians in its extortionate attempts to influence, interfere with,and deprive physicians, the plaintiff and the class of intangibleproperty interests inherent in the physician-patient fiduciaryrelationship to which Aetna is not entitled," the action says.

Dominance

"Aetna's aggressive strategy to dominate the HMO market and its meteoricrise in predominance in the HMO market has greatly heightened its profitdriven motives and its ability to reduce and limit the quality ofhealthcare services it provides the plaintiff and the class throughheavy-handed and extortionate conduct," the complaint says.

The lawsuit alleged Aetna's primary goal is to maximize profits foritself and its shareholders. "In effectuating an overly aggressiveapproach pursuing its profit oriented goals, Aetna has failed todisclose numerous material facts to the plaintiff and the class,"according to the action.

HOLOCAUST VICTIMS: German Envoy to Discuss Compensation with Poles------------------------------------------------------------------Poland hopes agreement on compensating former Nazi-era slave and forcedlaborers can be reached during the next round of international talks onthe issue, a Polish negotiator said last Friday. ''We hope the nextround will produce a reasonable offer on the German side and we will beable to accept it,'' Deputy Foreign Minister Janusz Stanczyk said in atelephone interview.

Stanczyk and Jerzy Widzyk, the Polish prime minister's chief of staff,were to meet with Germany's top negotiator, Otto Lambsdorff, in Warsawlate last Friday.

Lambsdorff is visiting Warsaw for a meeting Saturday of the TrilateralCommission, a club of influential citizens from the world's mostpowerful countries, founded in 1973. He also is to meet Foreign MinisterBronislaw Geremek.

Two days of negotiations on the fund, to which German industry and thegovernment would contribute, wrapped up last Wednesday in Bonn, Germany,with the sides closer but still without agreement. The next round isexpected in December.

Stanczyk said last Friday's talks with Lambsdorff will give Polishofficials another chance to explain their position. Poland wants a''general agreement to cover all those who have legal right to claimcompensation because of slave and forced labor,'' he said. He saidPoland will continue to press for inclusion of people forced to work onGerman farms during World War II in the compensation plan, an ideaGermany so far has rejected.

An estimated 220,000 Poles who were forced to work on German farms arestill alive in Poland. Stanczyk emphasized that during the Bonnnegotiations, German officials seemed willing to accept the criterion ofdeportation as the main prerequisite for defining forced labor.''Deportation concerned also forced farm laborers, not only those forcedto work in industry or public sector,'' Stanczyk said.

German companies proposed the compensation fund in February underpressure of class-action lawsuits in the United States. As part of theagreement, the U.S. government has offered to file statements ofinterest in courts where lawsuits are filed recommending that judgesturn the cases over to the foundation. About 50 firms, including 18 thathave publicly stated their support, have signed on to contribute to thefund, which aims to compensate about 1.5 million to 2.3 million victims.(AP Worldstream Nov-19-1999)

MOHAWK INDUSTRIES: Contests Carpet Antitrust Suits in Georgia & CA------------------------------------------------------------------In December 1995, the Company and four other carpet manufacturers wereadded as defendants in a purported class action lawsuit, In re CarpetAntitrust Litigation, pending in the United States District Court forthe Northern District of Georgia, Rome Division. The amended complaintalleges price fixing regarding polypropylene products in violation ofSection One of the Sherman Act. In September 1997, the Court determinedthat the plaintiffs met their burden of establishing the requirementsfor class certification and granted the plaintiffs' motion to certifythe class.

The Company is a party to two consolidated lawsuits captioned Gaehwilerv. Sunrise Carpet Industries, Inc. et. al. and Patco Enterprises, Inc.v. Sunrise Carpet Industries, Inc. et. al.; both of which were filed inthe Superior Court of the State of California, City and County of SanFrancisco in 1996. Both complaints were brought on behalf of a purportedclass of indirect purchasers of carpet in the State of California andseek damages for alleged violations of California antitrust and unfaircompetition laws. The complaints filed do not specify any amount ofdamages but do request for any unlawful conduct to be enjoined andtreble damages plus reimbursement for fees and costs.

In October 1998, two plaintiffs, on behalf of an alleged class ofpurchasers of nylon carpet products, filed a complaint in the UnitedStates District Court for the Northern District of Georgia against theCompany and two of its subsidiaries as well as a competitor and one ofits subsidiaries. The complaint alleges that the Company acted inconcert with other carpet manufacturers to restrain competition in thesale of certain nylon carpet products. The Company has filed an answerand denied the allegations in the complaint and set forth its defenses.

In February 1999, a similar complaint was filed in the Superior Court ofthe State of California, City and County of San Francisco, on behalf ofa purported class based on indirect purchases of nylon carpet in theState of California and alleges violations of California antitrust andunfair competition laws. The complaints described over do not specifyany specific amount of damages but do request injunctive relief andtreble damages plus reimbursement for fees and costs. The Companybelieves it has meritorious defenses and intends to vigorously defendagainst these actions.

NELLCOR PURITAN: Ruling May Make Securities Class Action Easier in CA---------------------------------------------------------------------In a ruling that could make it easier for class action attorneys to sueofficers and directors for securities fraud in California state courts,a state appeals panel in San Francisco said all of Nellcor PuritanBennett Inc.'s directors may be sued as a group under state law even ifthere is no proof that each of them made misleading statements toinvestors Ronconi et al. v. Larkin et al., No. A079019 (CA Ct. App., 1stDist., Sept. 3, 1999).

Of course, any advantage this ruling might provide to plaintiffs couldbe cancelled out if it was reversed by the California Supreme Court, orif President Bill Clinton agrees to sign federal legislation that wouldeffectively force nearly all class actions involving multi-state partiesinto federal court. The U.S. House of Representatives passed H.R. 1875,which will allow defendants to remove most state court class actions tofederal court. One of the goals of the legislation is to plug what somesee as loopholes in recent securities reform that supposedly allowplaintiff attorneys to "end run" its strict pleading and discoverystandards. However, the bill passed by a narrow margin and its prospectsin the U.S. Senate and the White House are uncertain.

Alfred Ronconi and other shareholders charged that they lost moneybecause the price of their Nellcor stock was inflated by the false andmisleading statements of company officers and directors and by theirconcealment of adverse information. The trial court tossed the suit outin an April 22, 1997, ruling that sustained defendants' demurrer to thecomplaint.

By the time the appeal came before the panel in San Francisco, two ofthe grounds for dismissal had been rendered moot by the DiamondMultimedia and Stor-Media rulings, so the panel focused on the thirdground -- the position that plaintiffs could not establish relianceunder California Corporations Code Secs. 25400 and 25500 because theycould not point to allegedly false statements made by each of thedefendant directors. In the appeal, plaintiffs argued that to be liableunder Sec. 25400 a director or officer must "willfully participate" in aviolation -- which could be triggered by their affirmance of a boarddecision to make an allegedly false or misleading statement.

The court agreed, noting that only this section of the law includes theword "participate" in a violation, rather than committing a directviolation. "The first amended complaint accuses each defendant of'participating' in a scheme, conspiracy and course of business tomanipulate the price of Nellcor stock to artificially high levels duringthe class period," the court wrote. "All of the defendants pursued acommon goal, i.e., concealing material adverse information." Thecomplaint also alleges that three corporate officers made falsestatements and that the other officer/director defendants "knew thatfalse statements had been made." (Corporate Officers and DirectorsLiability Litigation Reporter, Vol. 14, No. 23, Pg. 3, Oct11-1999)

SALMONELLA OUTBREAK: Aussie Lawsuit against Nippy's for Trial Next Year-----------------------------------------------------------------------A class action over a salmonella outbreak in Adelaide linked to orangejuice is likely to go to trial towards the middle of next year. In theFederal Court last Friday lawyers acting for more than 300 people weredirected by Justice John Mansfield to prepare their case by the end ofFebruary.

>From there it was expected a date would be set for trial with the issuesof liability and possible damages to be considered separately. JusticeMansfield said the applicants should be in a position to serve therespondents with statements of evidence and a list of proposed witnessesby February 25. He set down March 14 for the next directions hearing.

The class action against Knipsel Fruit Juices Pty Ltd, trading asNippy's, was launched following the salmonella outbreak in March thisyear which was traced to Nippy's orange juice. Sales were banned forsome time with the source of the bacteria eventually traced to orangesfrom a Riverland supplier which had not been properly washed. Thatsupplier was now also involved in the court action.About 500 people were thought to have been affected by the salmonellaoutbreak. (AAP Newsfeed Nov-19-1999)

SGL CARBON: Ch 11 Filing Legitimate in Face of Price-Fixing Litigation----------------------------------------------------------------------A financially sound company's filing of a Chapter 11 petition in lightof potential price-fixing liability, which presents a significant threatto its continued business, should not be dismissed as a "bad faith"filing under sec. 1112(b) of the Bankruptcy Code, the U.S. DistrictCourt for the District of Delaware has ruled. In re SGL Carbon Corp.,No. 98-2779-JJF (D DE, April 23, 1999). German steel-component supplierSGL Carbon AG is not abusing U.S. Bankruptcy laws, U.S. District JudgeJoseph J. Farnan concluded, in its legitimate attempt to deal with theantitrust litigation's potentially devastating effects on the company.

$135 Million Criminal Fine

SGL Carbon AG last month agreed to pay a record $135 million antitrustfine and plead guilty to participating in a worldwide conspiracy to fixprices and allocate sales volume. The Department of Justice accused themaker of graphite products and its CEO, Robert J. Koehler, withconspiring with other cartel members to suppress and eliminatecompetition in the graphite-electrodes industry from at least July 1992to June 1997. Koehler agreed to pay a $10 million fine, the largestantitrust fine against an individual. SGL Carbon is the fourth cartelmember to be prosecuted in the DOJ's investigation of anticompetitivepractices that forced steelmakers in the United States and othercountries to pay inflated prices for graphite electrodes, according tothe department.

Bankruptcy Proceedings Creditors had argued that the SGL bankruptcy caseshould be dismissed because it was filed strictly to gain leverage inantitrust suits. Bankruptcy specialists view SGL's Chapter 11 status asan added inducement for civil plaintiffs to settle their claims out ofcourt on terms favorable to SGL rather than pursuing a lawsuit andbecoming a creditor of the reorganized company. "The threat to thedebtor's business posed by pending antitrust litigation against it isboth real and substantial," wrote Judge Farnan. "Consistent with thepolicies and purposes of Chapter 11, which encourage early filing so asto increase the possibility of successful reorganization, the Court willnot allow the Debtor to wait idly by for impending financial andoperational ruin, when the Debtor can take action now to avoid such aconsequence."

SGL, the world's leading maker of graphite products for steelmakers, isnot insolvent, but its U.A. unit has been plagued by antitrust claims.As a result of a federal investigation of alleged price fixing ofcarbon-electrodes, it is facing multiple lawsuits, including a classaction antitrust suit by steel producers.

The unsecured creditors' committee, of which eight members areplaintiffs in the antitrust litigation and one is a trade creditor,sought to dismiss the case on the ground SGL was not experiencingfinancial difficulty and thus seeking Chapter 11 protection was purely alitigation ploy.

Judge Farnan, however, noted that SGL officials asserted that thefinancial demands of antitrust claimants could break the company becauseit could not afford to pay the damages sought by plaintiffs totalinghundreds of millions of dollars, before trebling under the antitruststatutes. Comparing SGL to the Johns-Manville Co., a building productsfirm that filed Chapter 11 in the 1980s after extensive involvement inasbestos litigation, the judge concluded that SGL's Chapter 11 filingwas not in bad faith. In determining that the company could legitimatelyproceed on its Chapter 11 course, he said SGL "was not formed as a shamsolely for the purposes of filing bankruptcy and has a legitimate chanceof reorganizing successfully."

U.S.: Missouri Landowners along Katy Trail Seek Payments--------------------------------------------------------Missouri landowners faced off with the Justice Department on November 18in a closely watched case over property rights along the Katy Trail. Inthe U.S. Court of Claims, lawyers representing about 300 landowners wholive along the Katy Trail argued that the government had illegally takenprivate property from them for the recreational trail. And they seemedto find a receptive ear with the presiding judge, Eric Bruggink.

At issue is a class-action suit filed in 1993, in which the propertyowners argue that the government should pay them for land used for theKaty Trail. For example, the lead plaintiff in the case, Dorothy Moore,contests the use of a mile-long strip of land along her property nearthe Daniel Boone Bridge in St. Charles County.

Lawyers for the plaintiffs said landowners could be entitled to $ 10million to $ 25 million. Conservation and outdoor groups are keepingclose tabs on the case because there are at least 145 similar trails in28 states, according to the Rails-to-Trails Conservancy, which filed abrief in support of the government's case.

The arguments on November 18 also included two related cases. Oneinvolves a couple from Warren County who live along the trail, and thesecond involves Grantwood Village, which is seeking compensation foreasements on a six-mile bike trail near Grant's Farm.

The Justice Department attorneys cited a 1983 law passed by Congressthat allows old railroad corridors to be turned over to states and trailgroups for recreational purposes. Congress created the program, called"railbanking," as a way to preserve the lines for possibletransportation use. Under that law, if a railroad does not want toabandon its line, it can lease or sell the land for another use withoutgiving back old easements, as long as the new use benefits the publicand meets other conditions.

Lawyers for the property owners argued that under Missouri law, when therailroad tracks along the trail were pulled up, the century-old railroadeasements should have reverted to the original property owners. Becausethey can't get the property back, they should get paid for it, theyargued.

The judge seemed skeptical that the railroad ever intends to revive thelines at issue in the three Missouri cases.

After hearing more than three hours of arguments, Bruggink said he wasinclined to find that railbanking was not a legitimate use of theeasements under Missouri law. Bruggink is not expected to issue a formaldecision for more than a month, said William Travis, an attorney for theplaintiffs. (St. Louis Post-Dispatch Nov-19-1999)

UPS: Sued in 4 States for Insurance Fraud; Money Put into Bermuda Co.---------------------------------------------------------------------Customers who bought insurance over the past 16 years for packagesshipped by United Parcel Service have filed a lawsuit accusing theworld's largest package delivery company of insurance fraud. UnitedParcel Service has not seen the lawsuit but feels it has acted properlyand will fight the allegations, company spokesman Norman Black said lastFriday.

The Atlanta-based shipper recently sold stock to the public, raisingnearly $5.5 billion in the biggest initial public offering to date. Inafternoon trading on the New York Stock Exchange, UPS shares were down$1.311/4 at $65 a share.

The lawsuit, filed November 18 in Montgomery County Common Pleas Court,seeks $14 billion in compensatory damages. However, if the judgeapproves it as a class-action lawsuit, that amount would be tripled to$42 billion, Dayton attorney James Swaim said. Swaim said the lawsuitwas filed on behalf of about 20 UPS customers from Indiana, Texas,Kentucky and Ohio.

The lawsuit claims that UPS fraudulently collected fees to pay insurancefor packages with values of more than $100 when the company wasself-insured. ''The money collected for the insurance wasn't used to buyinsurance but was directed to a Bermuda business owned by UPSstockholders,'' said Swaim. The suit said UPS was operating as aninsurance company without a license to do so.

The lawsuit stems from documents obtained in the federal government'scase against UPS in U.S. Tax Court on Aug. 9. A Tax Court judge ruledthat UPS set up a Bermuda-based corporation as an insurance company toavoid paying income taxes. The judge found that UPS must pay taxes onthe money sent to the Bermuda company.

UPS recently took a $1.44 billion charge as a result of the ruling andmade a $1.3 billion payment to the government to stop interest penaltieswhile it considers an appeal, Black said.

Until 1984, UPS sold and provided its own insurance for customers.Rather than face the possibility of being regulated by state insurancecommissioners as an insurance company, Black said UPS then began usingPittsburgh-based National Union Fire Insurance Co. To write theinsurance for UPS packages.

National Union Fire Insurance, a co-defendant in the lawsuit, usedOverseas Partners Ltd. In Bermuda to reinsure the coverage NationalUnion Fire had written. Overseas Partners includes the company that UPSspun off when it exited the insurance business in 1984. It is owned byholders of private UPS stock but is independent of UPS, Black said. ''Webelieve we followed every state regulation and rule interpretation andapplication at the time we were exiting the insurance business,'' Blacksaid. Because of the tax dispute with the government, UPS on Oct. 1 gotback into providing its own package insurance through a subsidiary,GlenLake Financial, that is licensed to write insurance in all 50states, Black said.

Other defendants in the new suit include American International Group,of New York; AIG Risk Management Inc., of New York; Frank B. HallInsurance Brokers of Paramus, N.J.; Prometheus Funding Corp., of NewYork; and Aon Group Ltd., of Bermuda. (AP Online Nov-19-1999)

WIRETAP RULES: Privacy Groups Ask Columbia Ap. Ct. to Throw Out Rules---------------------------------------------------------------------Leading U.S. privacy groups last Thursday filed a lawsuit to block newfederal wiretapping rules they said would require the tracking ofwireless telephone users and monitoring of Internet traffic. The groupssaid the new rules, released by the Federal Communications Commission inAugust, would lead to vast surveillance abuses and exceeded a 1994 lawthat called for updated wiretapping standards.

The American Civil Liberties Union and the Electronic PrivacyInformation Center asked the U.S. Court of Appeals for the District ofColumbia to throw out the rules. ``We are now at a historiccrossroad,'' said Barry Steinhardt, associate director of the ACLU. ``Wecan use emerging technologies to protect our personal privacy, or we cansuccumb to scare tactics and exaggerated claims...and give up ourcherished rights, perhaps forever.''

A U.S. Justice Department official said the government would ask thecourt to move as quickly as possible to dismiss the lawsuit. ``We'regoing to vigorously oppose this lawsuit,'' Assistant Attorney GeneralStephen Colgate said. ``We didn't get everything we wanted from the FCC.We think they played their role as a neutral arbiter.''

Major local telephone companies have also complained that the rulesexceeded the law's mandate and required them to make costly changes totheir networks that could raise prices for consumers. Industry groupsare also expected to file suit to block the new rules.

Traditional wiretap techniques do not work with digital technology,which would be impenetrable without assistance from the phonecompanies. Under the 1994 Communications Assistance for Law EnforcementAct, telecommunications carriers were supposed to negotiate with lawenforcement officials led by the FBI to create rules that would allowfor court-authorized wiretapping on newly installed telephone switches.Lawmakers at the time said the act was intended to preserve wiretappingcapabilities that existed on older systems without granting any expandedmonitoring power.

After years of disputes, industry and privacy groups rejected ninecapabilities that the FBI requested be built into the network, such asmonitoring a conference call after the person being tapped hangs up andreporting the location of wireless callers.

The law established that the FCC should resolve disputes and in rulesreleased Aug. 31, the agency decided that the industry should berequired to add most of the disputed capabilities. The FCC included thelocation of a wireless telephone caller as one of the law'srequirements, meaning wireless carriers would be required to buildnetworks capable of tracking their customers. That outraged privacygroups.

The groups also objected to a provision allowing law enforcers to getaccess to electronic packets of digital data that include both thecontents of a portion of a phone call and identifying information aboutthe call even when a court has granted authority only to access theidentifying information. (Washington Reuters Nov-18-1999)

* Agencies & Groups Join Forces against Telemarketing Fraud-----------------------------------------------------------It's time for the American public to know what 10 percent of thetelemarketing industry knows. It's time to "Know Fraud." Localrepresentatives for the U.S. Postal Service, the U.S. Attorney's Office,the Better Business Bureau and the American Association of RetiredPersons joined forces to help launch a nationwide promotion to educateand protect consumers from mail and telemarketing fraud.

The program includes television announcements, videotapes that areavailable for viewing at area libraries and fraud avoidance post cards,which will be mailed to households nationwide. "The primary goal of'Know Fraud' is to help consumers help themselves by teaching them howto avoid being a victim of telemarketing or mail fraud," said U.S.Postal Inspector Rey Santiago. It is estimated that each year Americansare bilked for about $ 40 billion by such scams, said Dan Brandt ofAARP. "There are approximately 140,000 telemarketing firms in the UnitedStates," he said. "Approximately 10 percent, or 14,000, of those firmsare frauds. Many victims of these scams are people over age 50."

The Tulsa Better Business Bureau receives about 70,000 phone calls ayear from people in eastern Oklahoma. A lot of those calls are fromindividuals who have been defrauded by mail or over the telephone, saidRick Brinkley, president of the Tulsa Better Business Bureau.

Currently, the most popular mail scams involve work-at-home schemes, hesaid. One popular telemarketing scheme involves a notice of winning alarge sum of money in a Canadian class-action lawsuit. It requires theparticipant to send large sums of his or her own to cover "settlementfees," Brinkley said. Also popular are guaranteed loan programs thatrequire the first installment be paid before receipt of the loan.

Telemarketing fraud is prosecutable and stiff penalties accompany afinding of guilt, said Stephen Lewis, U.S attorney. But by that time,such organizations have spirited the money to a Swedish bank account orsome other hidden treasure box. "Rarely do the victims deriverestitution from prosecution," he said. "That is what makes victimavoidance education critical to safeguarding the public." (Tulsa WorldNov-18-1999)

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